WPI Inflation Drops to -1.21% in October 2025 Due to GST Cut and Base Effect

India’s Wholesale Price Index (WPI) inflation fell sharply to -1.21% in October 2025, marking a 27-month low. This drop was primarily driven by recent GST rate cuts and a favourable base effect from last year’s higher inflation levels. The decline was broad-based, with prices of key commodities like food, fuel, and metals showing significant reductions.

The WPI food index fell deeply into deflation at -5.04% year-on-year, down from -1.99% in September. Primary articles also saw a sharp fall, reflecting lower prices for agriculture and mineral products. Fuel and power prices decreased by 2.55%, boosted by stable international crude oil prices.

The GST rate cuts that came into effect in late September reduced tax burdens on many commonly consumed goods, directly contributing to lower wholesale prices. Alongside this, the favourable base effect further pushed the inflation rate into negative territory when comparing October 2025 against the previous year’s numbers.

This decline in wholesale prices is expected to influence inflation trends across the economy, including consumer retail prices, and may impact monetary policy decisions. With inflation easing, particularly in food and energy sectors, there is speculation of potential interest rate adjustments by the Reserve Bank of India to support growth.

Overall, the October WPI data highlights the significant role of tax policy and underlying price base effects in shaping India’s inflation outlook, with easing wholesale prices signaling benign inflationary pressures in the near term.